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What is IT Outsourcing?

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What is IT Outsourcing?

IT outsourcing is fast becoming commonplace for businesses of all sizes and across a range of industries. According to a recent study, it is estimated that globally the outsourcing industry is worth $92.5 billion, with IT services being the most popular aspect of a business to outsource.

IT outsourcing simply describes the process of hiring specialist staff from outside of your organisation to handle certain, or all, of your organisation’s technology processes.

Outsourcing can be used to help support your existing IT team in their day to day functions, this is also known as co-sourced IT services. Or it can be used to help manage your organisation’s technological functions entirely, which is referred to as fully managed IT services.

Businesses can outsource any aspects of their technological functions, including; web development, server hosting, telecommunications, IT support and more.

Types of IT Outsourcing

IT outsourcing is a broad term and covers several different methods of outsourcing, each suiting businesses of different sizes, with different objectives and within different industries. The main types of IT outsourcing include the following.

On-shore, or domestic outsourcing: Onshore outsourcing, also referred to as domestic or homeshoring, involves hiring IT staff from within the same country as your business. This is typically done to reduce timeframes and reach a wider pool of talent and expertise within the industry. Onshore outsourcing can be conducted either on-site or remotely.

Nearshore outsourcing: Hiring IT specialists and staff from neighbouring countries is referred to as nearshore outsourcing. This type of outsourcing can allow organisations to reach a wider range of specialists within the industry and allow for savings on labour costs. Nearshoring is typically outsourcing to countries within the same time zone or within a 1 or 2 hour time difference. 

Offshore outsourcing: Offshore outsourcing involves hiring IT specialists from across the world. The term offshoring typically applies to outsourcing to countries that have a much larger time difference. This is considered to be the most cost-effective method of outsourcing, as it allows organisations to benefit from lower labour costs while having access to the greatest amount of available talent. Offshoring can present communication issues due to the larger time differences, however, it offers a practical solution for organisations who need to maintain and manage uninterrupted IT services. 

Cloud Computing: Cloud computing is fast becoming one of the most popular methods of offshoring. Accessible to businesses of all sizes and within all industries, cloud computing involves investing in an external IT service provider over the internet. Typically this type of outsourcing offers services such as Infrastructure-as-a-service (IaaS), Platform-as-a-service (PaaS), and Software-as-a-service (SaaS).

Managed Services: Outsourcing using managed services involves contracting external specialist organisations to provide IT services. These organisations can also often act as technology consultants for your business, presenting an accessible solution for business expansion for organisations with fewer resources. Managed service providers typically offer services such as business IT support, Connectivity, Telephony and Hosting services.

Commonly Outsourced IT Services

Organisations may outsource different IT functions for different reasons. Some of the most commonly outsourced services include;

  • Software development
  • Web hosting
  • Technology support
  • Telecommunications
  • IT outstaffing
  • Infrastructure, i.e. – computing hardware, software or network installations
  • Email services

Reasons for IT Outsourcing

IT outsourcing offers a host of benefits to businesses and can offer a more sustainable way for many businesses to grow and expand. Reasons for outsourcing IT often include;

Reducing costs: Outsourcing can be much cheaper than training existing employees or hiring full-time inhouse staff to help manage IT issues. It also gives organisations the ability to hire IT experts to solve more complex problems. 

Accessing new skills: Companies offering outsourced IT services have experience and a wealth of knowledge about IT services and functions. Outsourcing can allow you to access this industry knowledge to help your business conduct its IT processes more efficiently.

Relieving pressure on internal IT teams: IT teams within smaller businesses may struggle to maintain and manage all of your business’s IT infrastructure. Additionally, if your IT team relies on just 1 or 2 individuals, problems can soon arise if a member of your team is ill or is on annual leave. Spreading the workload through the use of IT outsourcing also allows you to spread the risk and avoid the occurrence of mistakes that can occur from overreliance on a very small number of individuals. 

Fully managed IT services: Small organisations may not have a dedicated IT team and may be relying on employees whose expertise lies in other business areas. Outsourcing can give businesses quick and easy access to a team of IT specialists, so your employees can focus on their role. 

Upscaling: With a dedicated, outsourced IT team managing your technological admin and services, your business has a greater capacity to develop and grow within your industry. As your employees will have more time to focus on improving your product or service offering and your organisation will have more funds available to invest in expansion. 

Improved business efficiency: Outsourcing IT services to professionals in the industry gives your organisation and employees more time to focus on their strengths and help to grow your business within your industry.

Challenges of IT Outsourcing

Outsourcing can present some challenges to businesses. The types of challenges your business may experience can depend on the type of outsourcing you invest in. 

Operating within different time zones: If your business invests in offshore outsourcing, you may run into problems with communication or delays in correcting issues across your IT services as a result of operating within a different time zone to your IT service provider.

Language barriers: Communication issues can arise from different language barriers. This is another problem that can occur from offshore outsourcing, and sometimes also nearshore outsourcing. Again, this can cause delays in businesses processes or result in IT issues going unresolved for long periods of time. 

Reduced quality control: Outsourcing of any kind can take away an element of control from your business. This can make it more challenging to ensure that your outsourced services are delivered and maintained at the same level of quality as the rest of your business’s processes.

Outsourced employees are less invested in your organisation: Individuals employed by your business through methods of outsourcing naturally have less of an investment in the success and progress of your organisation, compared to your in-house employees. This can lead to quality issues and potentially a lower return on investment than hiring full time, in-house members of staff. 

While there are some challenges to outsourcing IT services, many of these can be easily avoided. Be sure to conduct thorough research into organisations that you are looking to outsource to, to ensure that you will be investing in a service that will strive to support your business as if it were their own.

Conclusion

IT outsourcing can provide a convenient and accessible way for businesses to ensure that their IT services are maintained while they continue to invest in the growth and expansion of their organisation. 

To ensure that your business can reap the benefits of outsourcing IT services it is important to conduct thorough research into the best organisations to outsource to and decide which of your IT functions would be most beneficial to outsource. 

At Tribeca Technology we offer IT support services tailored to businesses in the Alternative Investment sector. From Hedge Fund IT Support to Private Equity IT Support. We operate as your business partner and want to be seen as an extension of your business, providing consistent quality and proactive assistance to help you grow and protect your business. 

For more information on our IT support and managed services for the alternative investment sector, get in touch with us today.

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